How Private Equity Ownership Will and Won't Change AssetMark

What You Need to Know

AssetMark is now fully owned by the private equity firm GTCR.
The move to go private won’t change the firm’s objectives and big ambitions, two senior executives said.
The big opportunities facing wealth managers and their technology partners will also bring fiercer competition, the duo warned.

The wealth management technology platform provider AssetMark is now fully owned by the private equity shop GTCR, which struck a deal back in April to buy the firm for $2.7 billion.

The new ownership structure is a big change in some ways for the company — bringing in new expertise and substantial resources to invest in the platform. In other ways, however, things are business as usual for AssetMark, especially as it pertains to the firm’s well-established growth strategy.

In fact, as AssetMark’s CEO Michael Kim recently discussed with ThinkAdvisor, the clear focus at the firm remains helping resource-constrained financial advisors utilize outsourcing to win back more time to focus on serving existing clients and winning new ones.

“I always like to point to our annual Benefits of Outsourcing Study, which is based on interviews with hundreds of our clients,” Kim said. “The big finding that informs our approach is the fact that, when you outsource investment management and related tasks, you can free up as many as 11 hours of advisor work per week.”

That’s like getting back an entire workday every week that advisors can instead spend meeting with clients and courting new prospects, Kim said. Alternatively, they can reinvest the time in other important parts of the business, from succession planning to technology management.

GTCR “gets this strategy,” added Lou Maiuri, chairman and group CEO of the newly formed parent company AssetMark Financial Holdings. So, rather than forcing any kind of change in direction, the PE firm will seek to deploy its capital to help AssetMark bring new capabilities and services to its popular platform.

“Look, we have achieved a record-high net promoter score of 72 in the last year,” Maiuri said. “That gives us the confidence to invest and keep doing what we have been doing every single day.”

Ultimately, Kim and Maiuri argued, AssetMark’s acquisition fits into a broader industry narrative about where wealth management is heading.

“This is clearly one of the big trends in our space — public companies growing private,” Kim said. “Envestnet is going through a big transition, and Focus Financial went through its own ownership transition process last year. It goes to show you that investors are coming for our space, because they see the potential just like we do.”

A Bright (and Competitive) Future for Wealth Managers

Kim and Maiuri said their outlook for AssetMark and its clients is highly bullish, thanks to a number of intersecting trends that should give a big tailwind to advisors willing to embrace a modernized, tech-forward approach to running their businesses — one that is based on the inherent value of financial planning.

“What’s behind this vision? It’s about demographics, with an aging population with significant accumulated assets seeking more professional help,” Kim said. “And related to that, it’s this idea of the ‘Great Wealth Transfer,’ with as much as $84 trillion expected to be passed down and inherited within the next 20 years.”

While brokers will remain an important part of the industry ecosystem, these dynamics will put a premium on the services of fiduciary advisors who can spend more time engaging in client discussions and goal-setting. Advisors with tax-smart capabilities and expertise about insurance will also thrive, they argued.